How to Learn From Startup Mistakes
You might already understand how to scale your business model profitably. But if you have any doubts about the product offering--whether people will buy it, whether it has a place in the marketplace, etc.--then you are clearly working on a startup.
This is a critical distinction, because the tactics and goals of a startup are entirely different from those of a company.
A startup isn't exactly a business; it's a set of promising hypotheses that can potentially give birth to a successful enterprise. Unfortunately, many entrepreneurs fail because they confuse the two, and pursue strategies that are inadequate for the stage they're at with their company.
So, what's the key to navigating a startup? Fail fast and fail often--this is the best advice anyone can give an entrepreneur starting his or her own business. Here's a bit more about how the mistakes common at each stage can lead to lasting success:
1. Try to experiment; don't try to grow. Steve Blank, the Silicon Valley-based serial entrepreneur, defines a startup as a temporary structure designed to identify a repeatable business model. Entrepreneurs have large visions, but most of the time, they're wrong. This can happen for multiple reasons: the vision might not be feasible, the idea doesn't stick, the concept is too early or too complex, etc. The startup process is about mitigating and reducing the risks in the vision to a point where the team feels confident pushing the accelerator in that direction. The key is iteration: Put the scientific method to use and rule out possible alternatives until you find one that works. Founding Father and inventor Benjamin Franklin stated famously: "I didn't fail the test, I just found a hundred ways to do it wrong." The same is true for you, and every piece of data is valuable. Make a push on an idea too early and you might find your vision leads to a dead end.
2. Take the time to find the right team. Having a good idea in a potentially large market is only part of the battle. The team is often cited among the key investment criteria for venture capitalists, and rightly so. A startup team will probably have to hit the drawing board more than once, sometimes making directional changes, other times taking radical shifts or pivots. This requires the team to have the talent, mind set, and vision to set off in pursuit of the next big thing. For example, the podcasting company Odeo was rendered virtually obsolete when Apple entered the market. But with the help of its capable and visionary team, Odeo radically reinvented itself into one of the most famous social media companies: Twitter.
3. Keep an eye on the runway. A startup can fail infinitely, but the only thing that will actually kill it is time. Every startup has a finite window to experiment and iterate on potential business models, which is usually referred to as the "runway." Unless you are independently wealthy, your runway will likely be determined by the amount of cash the team can live on. This means startups should run a lean operation to maximize their lifeline. It also means speed is critical for success: The tighter you can run experiments and the faster you can iterate on your startup, the more chances you'll have of refining the concept to the point where it's ready to scale (Author and consultant Eric Ries pioneered The Lean Startup model, which offers great advice on this subject). Your goal as a startup is not to die, to stay alive, and to iterate until you find a breakthrough business.
4. Transform into a company. Once you've run the tests and the data, plus verified that customers love your concept and that there is a predictable (and hopefully profitable) path to growth, you're ready to break out. Your goal will shift from experimentation to implementation. At this stage, you should put all available resources toward developing your product and doing whatever it takes to get it into the hands of customers. It's now a game of production, sales, and distribution.
Tony Navarro is the Founder and CEO of Streamcal, a venture that redefines the way schedules and calendars are published, shared, and consumed across the web. He is originally from Colombia and strongly believes in the power of entrepreneurship to generate economic growth. Before Streamcal, Tony worked on several concepts including a card-linked loyalty program for SMEs, and a gesture-based hardware technology company. Tony has had a broad range of professional experiences that include positions in finance, consulting and design. He holds an MBA degree from Wharton and an MPA degree from Harvard, and currently lives in Boston with his wife.
The Young Entrepreneur Council (YEC) is an invite-only nonprofit organization comprised of the world's most promising young entrepreneurs. The YEC recently published #FixYoungAmerica: How to Rebuild Our Economy and Put Young Americans Back to Work (for Good), a book of 30+ proven solutions to help end youth unemployment.
